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Bear of the Day: Cardinal Health (CAH)

Sometimes, it is easy to get caught up in the momentum of a fast-moving stock. We have all heard the old adage of “Buy low and sell high” but it is equally as fun to “Buy high and sell higher.” You have to be sure that your stock that is on the move has staying power and is not just on a quick sugar high. One way to figure this out is by looking at earnings. Stocks with the strongest earnings trends tend to outperform those with weak earnings profiles. When analysts on Wall Street start moving their numbers in the wrong direction, it can lead to problems for a stock’s price.

Today’s Bear of the Day is a stock that has seen earnings estimate revisions coming down. That stock is Cardinal Health CAH. Cardinal Health, Inc. operates as an integrated healthcare services and products company in the United States, Canada, Europe, Asia, and internationally. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. The company operates in two segments, Pharmaceutical and Medical. 

Currently, Cardinal Heath is a Zacks Rank #5 (Strong Sell). The reason for the unfavorable Zacks Rank is the recent earnings estimate revisions from analysts all over Wall Street. Over the last sixty days, two analysts have cut their expectations for both the current year and next year. The bearish sentiment has dropped our Zacks Consensus Estimates for the current year from $5.85 to $5.60 while next year’s number is off from $6.57 to $6.14. That current year number represents a mere 54 bps of growth over last year while next year is forecast to come in at 9.6% growth. Sales growth has still been relatively strong with 9.15% this year and 4.81% next year.

The Medical – Dental Supplies industry ranks in the Top 33% of our Zacks Industry Rank. There are other stocks within the same industry which are in the good graces of the Zacks Rank. These include Zacks Rank #1 (Strong Buy) Laboratory Corp of America LH and well as Zacks Rank #2 (Buy) STAAR Surgical STAA.

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Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report
Cardinal Health, Inc. (CAH): Free Stock Analysis Report
STAAR Surgical Company (STAA): Free Stock Analysis Report
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